Question

Blythe Company has provided the following information: Sales price per unit Variable cost per unit Fixed costs per month $45 12 $12,600 What is the amount of sales in dollars required for Blythe to break even? (Round any percentages to two decimal places and your final answer to the nearest dollar.) O A. $382 O B. $1,050 O c. $12,600 O D. $17,183

Answer 1

Answer:

Break-even point dollars

= Fixed cost

   Contribution margin ratio

= $12,600

    0.73

=  $17,260

Contribution per unit = Selling price - Variable cost per unit

                                   = $45 - $12

                                   =  $33                                                                                                                        

Contribution margin ratio = Contribution per unit

                                              Selling price per unit

                                          = $33

                                             $45

                                         = 0.73

Explanation:

In this case,  we need to calculate contribution per unit, which is selling price minus variable cost per unit. Then, we will determine the contribution margin ratio, which is contribution per unit divided by selling price. Finally, we will determine the break-even sales in dollars, which is fixed cost divided by contribution margin ratio.